Memorandum submitted by the National Joint
Pitch Council (NJPC)
OPENING STATEMENT
1. The independent members and executive
of the National Joint Pitch Council (NJPC) submit that no indications
on security of tenure were given to those buying positions on
bookmakers' lists in recent years.
2. However, we consider that the racecourse
bookmakers sold and purchased list positions in good faith on
the understanding that the bookmakers' lists would last in perpetuity
and the NJPC administered the process on this premise.
INTRODUCTION AND
SCOPE
3. The NJPC is the organisation that was
appointed by the Horserace Betting Levy Board (HBLB) to administer
betting areas on racecourses for the period between 8 October
1998 and 31 August 2007. It has seven members—three independent
members appointed by the HBLB, two members appointed by the Racecourse
Association (RCA), one member appointed by the National Association
of Bookmakers (NAB) and one member appointed by the Rails' Bookmakers'
Association (RBA).
4. This submission is made by the independent
members and executive of the NJPC, who are grateful for the opportunity
to contribute to this process. The other constituent members of
the NJPC have made their own submissions. The three independent
members are:
— Tom Clarke, appointed in 1998,
chairman of the NJPC since May 2001, formerly editor of the Sporting
Life and sports editor of the Daily Mail and the Times;
— Michael Bowler, appointed in
2000, formerly a practising lawyer and senior partner of the London
law firm Harbottle and Lewis; and
— William Blaney, appointed in
2001 and a qualified accountant with extensive business experience.
5. The Chief Executive Officer of the NJPC
is Tim Moore, who was appointed in July 2002.
6. We have concentrated our submission on
the Select Committee's second term of reference, relating to security
of tenure. We consider that the first and third terms of reference
are a matter for the primary interested parties—namely the
racecourse bookmakers and the racecourses.
EXECUTIVE SUMMARY
7. Prior to the letter received from the
RCA dated 14 March 2007, the NJPC had not received any indication
from racecourses, HBLB, DCMS or racecourse bookmakers that the
security of tenure of bookmakers' list positions was under any
threat.
8. The independent members of the NJPC considered
that the bookmakers' lists would exist in perpetuity unless the
racecourse ceased to operate or until a particular betting ring
was closed.
9. The independent members of the NJPC made
brief reference to security of tenure in their response to a DCMS
position paper in May 2003.
10. However, we are reasonably certain that
DCMS did not intend security of tenure to be curtailed by the
Gambling Act 2005 (Act).
11. The independent members of the NJPC
considered that the five-times rule and the bookmakers' lists
were and are entirely separate entities and that commercial negotiations
on bookmakers' rent would co-exist alongside the bookmakers' lists.
BACKGROUND AND
RELEVANT STATISTICS
12. In 1997, the RCA gave notice that it
intended to terminate the Fergusson agreement which had underpinned
the administration of racecourse betting rings since 1958. The
HBLB subsequently set up a committee chaired by Sir John Sparrow
to consider what replacement arrangements should be made. This
committee produced the Report on the Administration of Horserace
Betting Rings (the Sparrow Report), which led to the setting
up of the NJPC. We expect that a more detailed history of this
has been included in the submissions to the Select Committee by
other interested parties.
13. The authority of the NJPC was enshrined
in the National Pitch Rules (Rules), which were approved by the
HBLB and enforced by the NJPC. Racecourses were bound by the Rules
through the certificates of approval issued by the HBLB and racecourse
bookmakers were bound by the Rules as a condition of their authorisation
to bet. The NJPC made annual recommendations to the HBLB for changes
to the Rules.
14. In all, 10 editions of the Rules were
published between 1998 and 2007.[25]
In each edition, a number of Rules had been crafted to govern
the procedures for transferring list positions.
15. The ability to transfer list positions
between authorised bookmakers had been recommended by the Sparrow
Report to revitalise racecourse betting rings by making it easier
for new blood to enter the betting rings. The first auctions in
this respect were held in December 1998. The terms and conditions
of sale for the first auction at Sandown racecourse—which,
like the terms and conditions for all subsequent auctions, make
no mention of tenure in any respect—see Annexe.
16. Initially, there were three ways of
transferring list positions:[26]
— to a member of the bookmaker's
immediate family by retirement or will; or
— for limited companies only,
by private treaty.
17. On 1 January 2002, following representations
by bookmakers, the Rules were changed by the HBLB to allow all
racecourse bookmakers (not just those that were limited companies)
to transfer list positions by private sale. This became by far
the most popular way of transferring list positions, accounting
for 91% of list positions sold (by value) from 1 January 2005
to 31 August 2007.
18. There were 71 auctions during the NJPC's
period of authority, with 8,164 lots sold for a total hammer price
of £56.3 million. In addition, 4,430 list positions were
sold privately (ie outside of auctions) for a total of £33.3
million. According to NJPC valuations,[27]
the total value of list positions within the maximum Designated
Numbers[28]
and extra 10[29]
for all betting rings was approximately £70 million on 1
January 2007. On that date, 667 authorised bookmakers were eligible
to bet in the 221 betting rings at Britain's 59 racecourses.
INDICATIONS ON
SECURITY OF
TENURE
19. The NJPC never made a specific written
statement on the issue of security of tenure for bookmakers' list
positions. In hindsight, this may seem odd to people unaccustomed
to the peculiarities of the racecourse betting industry. However,
in 1998 when the NJPC was set up, legislative change was not anticipated
and, in any case, bookmakers' seniority lists had existed since
1928 and the lists eventually adopted by the NJPC dated back to
1946, which gave the overwhelming impression that the lists were
not subject to a fixed term.
20. Therefore, it was not considered that
any statement on tenure was needed. Indeed, such a statement was
not even contemplated. We contend that, at that time, it was taken
for granted by all parties that the bookmakers' lists did not
have a limited "shelf life."
21. Accordingly, it was acknowledged by
the NJPC board that, under the Rules, a list position would remain
in the ownership of the bookmaker unless a racecourse ceased to
operate.[30]
22. The Sparrow Report had made it clear,
however, that the list positions did not confer upon bookmakers
any right of entry to any betting ring or entitlement to occupy,
whether by licence or otherwise, any area or areas in the betting
ring. This caveat was repeated in the preamble to the Rules.
23. Also, all parties were aware that the
Rules derived the basis of their authority from the HBLB certificates
of approval. This implied that any termination of the certificates
of approval would result in the cessation of the Rules, although
this did not automatically mean that the bookmakers' lists would
no longer be recognised.
24. In May 2003, DCMS published a position
paper entitled Reform of Betting Legislation. In response,
the independent members of the NJPC commented that "We, too,
recognise that bookmakers have invested large amounts of money
in list positions at racecourses. As a consequence, we believe
that the bookmakers' lists should be sacrosanct and persist into
the era of the Gambling Commission and beyond. All list positions
have been purchased on the premise that tenure is permanent, and
any deviation from this tenet should be made only after full and
appropriate consultation with the bookmakers and with consideration
for the residual market value of their portfolios of list positions."
25. However, DCMS did not indicate, either
publicly or at numerous (approximately quarterly) meetings with
the NJPC chairman and executive, that there was any likelihood
that the bookmakers' lists would not be sacrosanct. Nor does the
Act or the regulations include any clause which specifically abolishes
or envisages the abolition of the lists. We can only conclude,
therefore, that DCMS had no intention for the Act to change the
status of the lists.
26. Similarly, neither the RCA nor the bookmakers
raised the issue at any of the NJPC meetings following the passing
of the Act in April 2005. Therefore, the NJPC was never alerted
to any prospect that the lists would have an end-date. Consequently,
we confirm that the NJPC did not have any information on security
of tenure that was not in the public domain.
27. After 2003 and prior to the Act being
passed by Parliament, it was widely known that the Act (if passed)
would lead to the eventual ending of the five-times rule and the
introduction of commercial arrangements for new betting areas
on racecourses.[31]
It was apparent that both of these developments could potentially
have an adverse impact on the value of existing bookmaker investments
in list positions.
28. Nevertheless, it was unclear at that
time what other impact the Act might have on racecourse bookmaking
or the NJPC itself. Therefore, in January 2005, the NJPC considered
it prudent to insert a clause into the terms and conditions of
auctions and private sales of list positions stating that "Authorised
Bookmakers are advised to be aware of the full implications of
the forthcoming Gambling Bill before buying or selling any list
positions."
29. However, because tenure was not considered
to be an issue, in no way was this intended to be a veiled warning
that security of tenure of bookmakers' list positions was under
threat. In the absence of any indications to the contrary, the
independent members of the NJPC considered that security of tenure
of list positions would last in perpetuity.
30. Accordingly, the independent members
of the NJPC were surprised when the RCA issued its letter on 14
March 2007, as this minute from the meeting of the NJPC in May
2007 indicates:
Mr Bowler asked Miss Davies why the RCA issued
its letter in March 2007, and not in 2005 when the draft Gambling
Legislation was issued. Miss Davies said the potential for this
issue to arise had always been in the background. However, it
was not until DCMS had published its regulations relating to tracks
in February 2007 that the position had been confirmed.
31. This confirms that the RCA itself had
not decided its policy position until the premises licence regulations
had been published on 27 February 2007, culminating in the 14
March letter. It would have been impossible for the NJPC to give
any indication on security of tenure before that date as such
a decision was not within its gift: it was within the gift only
of the racecourses or, possibly, the Government.
RECOMMENDATION
32. The independent members of the NJPC
have always considered that the five-times rule and the bookmakers'
lists are distinct and separate issues. We see no reason why the
lists could not still continue after the five-times rule has lapsed,
or why this would necessarily frustrate the ability of the bookmakers
and the racecourses to negotiate on commercial terms.
33. We would expect that, almost by definition,
such terms would be reasonable and appropriate, given the fact
that the racecourses understandably wish to maximise revenue from
bookmaking on their premises, tempered by the imperative that
it would not be in their interest to price bookmakers out of the
market. We suggest that the two parties might wish to consider
appointing an independent body or arbiter to oversee the process
or to step in where there was a deadlock.
34. Should the bookmaker not wish to work
under the commercial framework agreed, we perceive that he would
have three options. He could either:
— sell his list position to another
bookmaker, accepting that the valuation may be affected by the
"rent" to be paid;
— not attend the racecourse on
some or all racedays; or
— seek redress through the competition
authorities.
CLOSING STATEMENT
35. We hope that this submission has been
helpful to the Select Committee. Should the Committee require
any further information or documentation, we would be pleased
to assist in any way.
October 2007
25 Copies of any/all editions of the NPRs are available
to the Select Committee on request. Back
26
A "list position" is a bookmaker's position relative
to other bookmakers on the bookmaker's list which entitles him
to select, in ascending numerical order commencing at number one,
a designated pitch in the betting ring from which to conduct his
betting business. "List positions" are also sometimes
called "seniority positions," "pick positions"
or "picks". Back
27
NJPC valuations were updated quarterly and based on auction values
and declared private sale values. Back
28
The maximum Designated Number is the highest number of bookmakers
permitted to stand in a particular betting ring on any given raceday. Back
29
The "extra 10" are the ten bookmakers who appear on
the bookmakers' lists immediately after the bookmakers within
the maximum Designated Number. Back
30
In the event of a particular betting ring closing while the racecourse
continued to operate, the NJPC developed a mechanism to merge
the displaced bookmakers into another list at that racecourse.
In some betting rings (ie the Rails), the NJPC agreed that it
was not possible to close the ring and that the affected bookmakers
must be relocated. Back
31
See Reform of Betting Legislation, Annex B, section 3. Back
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